<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2 TO
FORM 10-KSB/A
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended July 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to ____________
Commission file number 0-23268
-------
AMERICAN TECHNOLOGIES GROUP, INC.
---------------------------------
(Name of small business issuer in its charter)
NEVADA 95-4307525
------ ----------
(State or other jurisdiction of (IRS. Employer
incorporation or organization) Identification No.)
1017 SOUTH MOUNTAIN AVENUE, MONROVIA, CA. 91016
-------------------------------------------------
(Address of principal executive offices) (zip code)
Issuer's telephone number: (818) 357-5000
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of exchange on which registered
None
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK
------------
(Title of Class)
Check whether the issuer (1) filed all reports to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes X No
--- ---
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulations S-B not contained in this form, and no disclosure will be
contained, to the best of the registrant's knowledge, in definitive proxy of
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
The registrant's revenues for its most recent fiscal year were $3,083,216.
As of October 31, 1997, the registrant had 21,253,442 shares of Common Stock
outstanding. The aggregate market value of the voting stock held by non-
affiliates was $53,297,880 computed by reference to the average closing bid and
asked prices on such date.
DOCUMENTS INCORPORATED BY REFERENCE
None.
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
The Directors and Executive Officers of the Company as of July 31, 1997 are
listed below, together with brief accounts of their business experience and
certain other information. Subsequent to July 31, 1997, Messrs. Kingon, Odom
and Wachsner were appointed to fill vacancies on the Board of Directors.
Year First
Present Elected
Name Age Office or Position Director
- ---- --- ------------------ --------
John Collins 46 Chairman of the Board of 1991
Directors, Chief Executive
Officer and Treasurer
Hugo Pomrehn 59 Director, Vice Chairman 1995
of the Board of Directors
Lawrence J. Brady 58 Director and 1997
President
Shui-Yin Lo 56 Director of Research 1993
and Development
and a Director
David Gann 48 Director of Marketing 1993
and a Director
Harold Rapp 51 Chief Operating Officer ---
JOHN COLLINS: has been Chief Executive Officer, Treasurer, and Director of
the Company since July, 1991, and also served as President from that date
until June, 1993. From 1983 until July, 1991, Mr. Collins operated New
Image Public Relations, which he co-founded. New Image provided financial
public relations and consulting services to emerging public companies, as
well as other services. Mr. Collins has resigned from all positions with the
Company effective December 1, 1997, however he will continue to provide
certain services to the Company as a consultant.
HUGO POMREHN: after serving as President from April, 1995 to March, 1997 and
Chief Operating Officer from November, 1995 to March, 1997, Mr. Pomrehn served
as Vice Chairman since March, 1997. Since November, 1995, he has served as a
Director.
2
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Effective December 1, 1997, Mr. Pomrehn has resigned from his position on the
Board and will serve as Executive Vice President - Special Projects on a part-
time basis where his sole focus will be on the Baser project.
From June, 1993, until March, 1995, he was a Senior Vice President at PLG
Inc., a risk management consulting firm. In 1992, Mr. Pomrehn served as Under
Secretary of Energy. He was the third ranking official at the U.S. Department
of Energy, which employs approximately 170,000 federal and contractor personnel
and has an annual budget of $20 billion. At the Department of Energy, he was
responsible for defense programs, environmental restoration and waste
management, as well as nuclear energy development and operation.
Prior to his nomination, he was Vice President and Manager of the Los
Angeles Office for Bechtel Corporation where he was principally employed since
1967 in positions of increasing responsibility. Mr. Pomrehn's assignments
included Assistant Chief Nuclear and Environmental Systems Engineer; Project
Engineer on the Arizona Nuclear Power Plant at Palo Verde, Arizona; and Project
Manager of the Korean Nuclear Projects. From 1986 to 1988, Mr. Pomrehn was Site
Director for the Browns Ferry Nuclear Power Plant operated by the Tennessee
Valley Authority. Subsequent to this assignment, he was named Vice President
and General Manager of the Bechtel/Kraftwerk Union Alliance providing
maintenance, modification and inspection services to U.S. operating nuclear
power plants.
LAWRENCE J. BRADY: became President and a Director in March, 1997. In
December, 1997, he became Chief Executive Officer and Chairman of the Board.
From 1994 until he joined the Company, Mr. Brady was an independent
consultant except for a five month period during which he served as president
of Chantal Pharmaceutical Corp. From 1991 to 1994 Mr. Brady served as a
director and founder of Capitoline International Group, Ltd., a consulting
firm. He was a Senior Vice President of Hill & Knowlton Public Affairs
Worldwide from 1987 to 1991 and Director of International Marketing for
Sanders Associates, a Lockheed subsidiary from 1985 to 1987.
Mr. Brady served as Assistant Secretary of Commerce for Trade
Administration in the Reagan Administration, responsible for administering
federal government export and import trade regulation functions, which
included high technology export control and enforcement programs, the
anti-dumping and countervailing duty laws and the anti-boycott and foreign
trade zone programs. He has completed all requirements for a Ph.D. in
International Economics and International Affairs except for his
dissertation.
SHUI-YIN LO: became Director of Research and Development and a Director in
June, 1993. From January, 1987 until June, 1993, he was Chief Executive Officer
of the Institute of Boson Studies Inc., a privately funded research company.
Dr. Lo received his Ph.D. in physics in 1966 from the University of Chicago. He
has been a visiting scholar at numerous universities and institutes including
Stanford University, California, Oxford University, England, Institute for
Theoretical Physics, Berlin University, Germany and the Institute of High Energy
Physics, Beijing, China.
DAVID GANN: was appointed Vice President of the Company in January, 1993, and
became President and Director in June, 1993. Upon the hiring of Mr. Pomrehn in
April, 1995, Mr. Gann relinquished his position as President and was appointed
Director of Marketing. In November, 1995 he became President of ATG Media. He
was President of Catalytic Solutions Inc. from July, 1990 to October, 1992, at
which time it was acquired by the Company. From 1987 to 1990, Mr. Gann worked
as a technical consultant to Los Angeles area banks for the disposal of high
tech equipment. Mr. Gann received a Bachelor of Science degree in 1972 from
Central Missouri State University.
3
<PAGE>
Mr. Gann has resigned from all positions with the Company, however he will
continue to provide certain services to the Company as a consultant.
HAROLD RAPP: has been Chief Operating Officer since March, 1997, and Chief
Financial Officer/Treasurer since December, 1997. Mr. Rapp was formerly a
principal and Executive Vice President of Baltres-Valentio Associates, a
larger Arizona based consulting engineering firm, whose clients included
Intel, Signetics, AT&T, Heitman Properties, Motorola, Carborundum and Arizona
State University. He is a successful inventor of vacuum distillation and
desalination technology who served on ATG's Advisory Board prior to formerly
joining the Company in March, 1997.
ALFRED KINGON: has been a principal of Kingon International, an
international investment firm since 1989. From 1987 to 1989, he was the
United States Ambassador to the European Union. Mr. Kingon previously has
served as Assistant to the President and Secretary to the Cabinet, Assistant
Secretary of the Treasury for Policy Planning and Communications and
Assistant Secretary of Commerce for International Economic Policy.
WILLIAM ODOM: is Director of National Security Studies for the Hudson
Institute and an adjunct professor at Yale University. As Director of the
National Security Agency from 1985 to 1988 he was responsible for signal
intelligence and communications security for the United States. He has many
other senior national security positions in the military and the executive
branch of the United States government, including in the Carter White House.
Mr. Odom also serves as a director of American Science and Engineering,
Inc., V-ONE Corporation and Nichols Research Corporation.
TERRY WACHSNER: is President of Heitman Management, one of the largest
commercial property management firms in the United States. He has held the
position since 1994 and had other positions with the firm since 1982. He is a
member of The National Advisory Council of Building Owners and Managers
Association International.
Directors are elected annually at the Company's annual meeting of shareholders.
The term of each person currently serving as a director will continue until the
Company's next annual meeting or until a successor is duly elected and
qualified.
Executive officers are appointed annually by the Board of Directors and serve at
the discretion of the Board, except to the extent that provisions of employment
agreements may govern.
SECTION 16(b) BENEFICIAL OWNERSHIP COMPLIANCE
Based upon the Company's review of the reports on Form 3, From 4 or Form 5
furnished to the Company pursuant to Section 16 of the Securities Exchange
Act of 1934, John Collins, David Gann, Jim Nicastro and Hugo Pomrehn failed
to timely file one Form 5 as to 1, 2, 1, and 1 transactions, respectively.
Additionally, John Collins failed to timely file 2 Form 4s, each as to 1
transaction; Hugo Pomrehn and David Gann each failed to timely file 4 Form
4s, each as to 1 transaction; Shui-Yin Lo failed to timely file 3 Form 4s,
each as to 1 transaction; Lawrence J. Brady failed to timely file 1 Form 3;
Jim Nicastro failed to timely file 2 Form 4s each as to 1 transaction; and Bill
Foster failed to timely file 4 Form 4s, as to an aggregate of 11 transactions.
4
<PAGE>
ADVISORY BOARD:
The Company's Advisory Board consists of renowned scientists or businessmen in
technological fields who have agreed to be available for scientific or other
consultations when needed. Board members will be compensated at individually
determined hourly rates and will be granted options to acquire 2,500 shares of
Common Stock at fair market value on the date of grant. Presently, twelve
individuals have agreed to serve as Advisors and the Company is discussing
appointment to the Advisory Board with additional people. The following is
summary background information on the twelve people who have agreed to serve on
the Advisory Board. There can be no assurance that these people will actually
serve on the Advisory Board for any particular length of time.
JAMES S.I. LO: holds a Ph.D. in clinical biochemistry from the University of
Toronto (1975). He is currently a Clinical Assistant Professor, Department of
Pathology, Health Sciences Center at Brooklyn, New York State University and is
a Clinical Biochemist at Brookdale Hospital and Medical Center, Brooklyn, New
York. Dr. S.I. Lo is the brother of Dr. S.Y. Lo, a director of the Company.
CHARLES YOUNG: holds a Ph.D. in physics from the Massachusetts Institute of
Technology (1977). He is currently a staff physicist at the Stanford Linear
Accelerator Center where he has been employed since 1978.
ANMIN LIU: holds a B.S. in civil engineering from Chuan Yuan University in
Taiwan and an M.S. in Sanitary Engineering from Colorado State University,
(1970). Since 1989 he has been the Engineer Manager at the Hyperion Wastewater
Treatment Plant of the City of Los Angeles where he responsible for engineering
and operations, including the multi-billion dollar expansion program ongoing at
the plant. He has supervised the start up of two of the four wastewater plants
operated by the City of Los Angeles.
BENJAMIN BONAVIDA: holds a Ph.D. in Immunochemistry from the University of
California, Los Angeles (1968). Since 1983 he has been a Professor,
Department of Microbiology and Immunology at the UCLA School of Medicine.
Since 1974 he has been a member of the American Association of Cancer
Research and since 1973 he has been a member of the American Association of
Immunologists, Federation of the American Societies for Experimental Biology.
Doctor Bonavida periodically serves on various National Institutes of Health
study sections.
S.Y. CHENG: holds a Ph.D. in Mathematics from the University of California,
Berkeley (1974). Since 1981 he has been a Professor of Mathematics at the
University of California, Los Angeles where he was Vice-Chairman of the
department from 1988 to 1990. In 1976 he was the Alfred P. Sloan Foundation
Fellow and in 1989 he was the J.C. Wong Fellow.
5
<PAGE>
GARY A. WILLIAMS: holds a Ph.D in Physics from the University of Califonria,
Berkeley (1974). Since 1984 he has been a Professor of Physics at the
University of California, Los Angeles. From 1978 to 1982 he was a Alfred P.
Sloan Foundation Fellow.
ED ROSE: holds a B.S. in Civil Engineering/Engineering Geology from the
University of Southern California (1956). He is currently an independent
consultant providing project and construction management services. For over 25
years he was employed by Bechtel Corporation retiring as a project manager. His
professional affiliations include the American Society of Civil Engineers and
the National Society of Professional Engineers.
DANIEL C. TSUI: holds a Ph.D. in Electrical Engineering from the University of
Chicago (1967). Since 1982 he has been a Professor of electrical engineering at
Princeton University. He is a member of the National Academy of Sciences,
Academia Sinica, Fellow of The American Physical Society, American Association
for the Advancement of Science. In 1984, he received the Oliver E. Buckley
Condensed Matter Physics Prize of The American Physical Society.
VIJAY K. DHIR: holds a Ph.D. in Mechanical Engineering from the University
of Kentucky, Lexington (1972). Since 1991 he has been a Professor,
Mechanical, Aerospace and Nuclear Engineering Department, University of
California, Los Angeles. Dr. Dhir has served as a referee of numerous
journals and has acted as a consultant to many entities including the Nuclear
Regulatory Commission, Rockwell International, General Electric Corporation,
Los Alamos National Laboratory and Brookhaven National Laboratory.
WILLIAM (KEN) CURRIE: holds a Ph.D. in Experimental Nuclear Physics from
Glasgow University, Scotland (1961). He is well recognized for his
contributions in renewable energy programs for Great Britain and the United
States. He has been pivotal in developing corporate business and scientific
relationships among United States governmental agencies, national
laboratories and the World Bank.
MARY LIDSTROM: holds a Ph.D. in Bacteriology from the University of
Wisconsin, Madison (1977). Since 1995 she has been a Professor of
Microbiology, University of Washington, Seattle, Washington. Previously she
was a Professor of Environmental Engineering Science, California Institute of
Technology, Pasadena, California. Her awards include the CalTech Award for
Excellence, CalTech Teaching Award and the National Science Foundation Award
for Women. Dr. Lidstrom has served on numerous editorial boards, most
recently for the Journal of Bacteriology and the Annual Reviews of
Microbiology.
REINHARD BRUCH: holds a Ph.D. in Physics from the Free University of Berlin,
Germany. Since 1991 he has been a Professor of Physics at the University of
Nevada, Reno. Dr. Bruch has authored over 160 publications and his recent
collaborations include Lawrence Livermore National Laboratory, University of
Uppsala, Max-Plank Institute for Quantenoptik, University of Pierre and Marie
Currie and Texas A&M University.
6
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION.
The tables and discussion below set forth information about the compensation
awarded to, earned by or paid to the Company's executive officers during the
fiscal years ended July 31, 1995, 1996, and 1997
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------- -------------
Other Annual
Name & Principal Position Year Salary Compensation Stock Options
------------------------- ---- ------ ------------ -------------
<S> <C> <C> <C> <C>
John Collins 1997 $252,493 0 250,000 (1)
Chairman of the Board, 70,000 (2)
Chief Executive Officer and
Treasurer 1996 189,459 0 97,500 (3)
1995 208,225 0 65,000 (4)
Hugo Pomrehn 1997 $120,662 0 250,000 (1)
Vice Chairman of the Board 50,000 (5)
40,000 (6)
1996 121,666 - 50,000 (7)
40,000 (8)
500,000 (9)
1995 - - 40,000 (10)
Shui-Yin Lo 1997 $151,576 0 250,000 (1)
Director of Research & 45,000 (5)
Development and a Director
1996 136,625 0 40,000 (7)
1995 120,120 0 60,000 (11)
David Gann 1997 $163,714 0 250,000 (1)
Director of Marketing and a 40,000 (5)
Director
1996 151,272 0 20,000 (7)
1995 139,756 0 40,000 (11)
Jim Nicastro 1997 $161,632 0 250,000 (1)
Vice President 40,000 (5)
1996 164,497 0 600,000 (12)
24,500 (7)
1995 155,081 0 20,000 (11)
John M. Dab 1997 $145,333 0 20,000 (5)
General Counsel and
Secretary 1996 67,308 (13) 0 90,000 (14)
25,000 (7)
1995 - (15) 0 55,000 (11)
- ---------------
</TABLE>
(Footnotes are on the following page.)
7
<PAGE>
(Footnotes from prior page.)
(1) The exercise price of these options is $3.00 per share, the estimated fair
market value on the date of grant. The options vest at the rate of 25% per year
commencing March, 1997.
(2) The exercise price of these options is $1.87 per share, 10% above the
estimated fair market value on the date of grant. The options vest at the rate
of 25% per year commencing January, 1998.
(3) The exercise price of these options is $1.65 per share, 10% above the
estimated fair market value on the date of grant. The options vest at the rate
of 25% per year commencing August, 1996.
(4) The exercise price of these options is $3.30 per share, 10% above the
estimated fair market value on the date of grant. The options vest at the rate
of 25% per year commencing August, 1995.
(5) The exercise price of these options is $1.70 per share, the estimated fair
market value on the date of grant. The options vest at the rate of 25% per year
commencing January, 1998.
(6) The exercise price of these options is $3.00 per share, One Dollar less
than the average of the closing bid and asked prices of the Common Stock over
the thirty trading days prior to the date of grant.
(7) The exercise price of these options is $1.50 per share, the estimated fair
market value on the date of grant. The options vest at the rate of 25% per year
commencing August, 1996.
(8) The exercise price of these options is $10.067 per share, One Dollar less
than the average of the closing bid and asked prices of the Common Stock over
the thirty trading days prior to the date of grant.
(9) The exercise price of these options is $3.00 per share, the estimated fair
market value on the date of grant. The options vest at the rate of 25% per year
commencing November, 1995; 250,000 options were voluntarily surrendered in
March, 1996.
(10) The exercise price of these options is $2.18 per share, One Dollar less
than the average of the closing bid and asked prices of the Common Stock over
the thirty trading days prior to the date of grant.
(11) The exercise price of these options is $3.00 per share, the estimated fair
market value on the date of grant. The options vest at the rate of 25% per year
commencing August, 1995.
(12) The exercise price of these options is $3.00 per share, the estimated
fair market value on the date of grant, 500,000 options were voluntarily
surrendered in March, 1996.
(13) Does not include $64,250 paid to Mr. Dab during the fiscal year as
legal fees prior to his employment by the Company.
(14) The exercise price of these options is $3.00 per share, the estimated
fair market value on the date of grant. Options for 30,000 shares of Common
Stock have vested and 30,000 options vest upon the occurrence of certain
events related to sales of The Force and 30,000 options vest upon listing of
the Company's Common Stock on a stock exchange.
(15) Does not include $118,700 in legal fees paid to Mr. Dab during the
fiscal year.
8
<PAGE>
OPTIONS GRANTED IN FISCAL 1997
Percent
of Total
Number of Options
Securities Granted to
Name Underlying Employees Expiration Date
---- Options in Fiscal Exercise ---------------
Granted 1997 Price
------- ---- -----
John Collins 250,000 13.1 3.00 March, 2006
70,000 3.7 1.87 January, 2006
Hugo Pomrehn 40,000 2.1 3.00 April, 2002
50,000 2.6 1.70 January, 2006
250,000 13.1 3.00 March, 2006
Shui-Yin Lo 250,000 13.1 3.00 March, 2006
45,000 2.4 1.70 January, 2006
David Gann 250,000 13.1 3.00 March, 2006
70,000 3.7 1.87 January, 2006
Jim Nicastro 250,000 13.1 3.00 March, 2006
70,000 3.7 1.87 January, 2006
John M. Dab 20,000 1.1 1.70 January, 2006
OPTION VALUES AT JULY 31, 1997
Number of Securities Underlying Value of in-the-money Options
Options at July 31, 1997 at July 31, 1997
------------------------ ----------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
John Collins 425,625 381,875 $ 436,163 $ 546,137
Shui-Yin Lo 858,750(1) 311,250 $ 882,338 $ 417,863
Hugo Pomrehn 445,000 275,000 $ 501,000 $ 399,000
David Gann 493,750(2) 581,250 $ 656,168 $1,111,583
Jim Nicastro 230,000 273,000 $ 241,488 $ 355,293
John M. Dab 63,750 126,250 $ 73,763 $ 181,638
- -----------------------
(1) Includes 450,000 options grant to Dr. Lo in connection with the sale to
the Company of certain technology rights.
(2) Includes 400,000 options grant to Mr. Gann in connection with the sale
to the Company of certain technology rights.
Effective January 1, 1997, the Company entered into one year employment
agreements with Messrs. Collins, Gann, Nicastro and Dab and Dr. Lo at annual
salaries of $266,466, $172,700, $170,000, $154,000 and $159,880, respectively.
Each of Messrs. Collins, Gann, Pomrehn and Nicastro and Dr. Lo were granted an
option to purchase to purchase 250,000 shares of Common Stock at a price of
$3.00 per share. The option expires in March, 2006 and vests at the rate of 25%
per year commencing as of March 1, 1997.
9
<PAGE>
Effective as of April 1, 1995, the Company entered into a three year
employment agreement with Mr. Pomrehn at a base salary of $120,000 per year.
In addition, the agreement requires the granting of an option to purchase
40,000 shares of Common Stock as of that date at $2.18 per share and each
anniversary thereof during the term of the agreement at $1.00 less than the
average of the closing bid and asked prices for the Common Stock over the
preceding 30 trading days. Each option will terminate upon the earlier of
five years after granting or thirty days after termination of the agreement
prior to the expiration its term. In December, 1997, Mr. Pomrehn's employment
agreement was amended to provide three day a week service to the Company as
Executive Vice President - Special Projects at an annual salary of $72,000.
Each employment agreement provides for early termination by the Company for
"cause," which includes final conviction of the employee of a felony involving
willful conduct materially detrimental to the Company or the final adjudication
of the employee in a civil proceeding for acts or omissions to act involving
willful conduct detrimental to the Company, and for "good reason" by the
employee, which includes the diminution of employee's title, responsibilities or
status, or reduction in pay or benefits. In addition, except for Mr. Pomrehn's
employment agreement, each agreement provides for the payment of three months
salary if the employee terminates his employment in connection with a Change of
Control as defined in the agreement or one year's salary in the event the
Company terminates the employee during the period commecing 90 dyas before and
ending 180 days after the Change of Control. Change of Control is defined as an
event or series of events that would be required to be described as a change in
control of the Company in a proxy or information statement distributed by the
Company pursuant to Section 14 of the Securities Exchange Act of 1934 in
response to Item 6(e) of Schedule 14A promulgated hereunder, or any substitute
provision which may hereafter be promulgated thereunder or otherwise adopted.
Directors of the Company who are employees do not receive compensation for
serving as such; non-employee Directors receive $7,500 and an option to purchase
10,000 shares of Common Stock at the fair market value on the day of appointment
per year. All Directors hold office until the next annual meeting of the
shareholders or until their successors have been duly elected and qualified.
All officers serve at the discretion of the Board of Directors.
The Company has no retirement, pension or similar programs at the present time.
The creation of any such plan, however, will be at the discretion of the Board
of Directors of the Company. The Board of Directors may, in the future, adopt
such employee benefit and executive compensation programs as it deems advisable
and consistent with the best interests of the shareholders and the financial
condition and potential of the Company.
10
<PAGE>
STOCK OPTION PLANS
The Company's 1993 Incentive Stock Option Plan and 1993 Non-Statutory Stock
Option Plan (the "Option Plans") provide for the granting of Incentive Stock
Options, within the meaning of Section 422b of the Internal Revenue Code of
1986, as amended, to employees and Non-Statutory Stock Options to employees,
non-employee directors, or consultants or independent contractors who provide
valuable services to the Company. At October 31, 1997, 1,658,000 shares of
Common Stock were reserved for issuance under the Option Plans. The Option
Plans were approved by the shareholders in November, 1993.
The Option Plans are administered by the Board of Directors or, if the Board so
designates, a Stock Option Committee consisting of at least two members of the
Board of Directors. The Board or the Stock Option Committee, as the case may
be, has the discretion to determine when and to whom options will be issued, the
number of shares subject to option and the price at which the options will be
exercisable. The Board or the Stock Option Committee will also determine
whether such options will be Incentive Stock Option or Non-Statutory Stock
Options and has full authority to interpret the Option Plans and to establish
and amend the rules and regulations relating thereto.
Under the Incentive Stock Option Plan, the exercise price of an Incentive Stock
Option shall not be less than the fair market value of the Common Stock on the
date the option is granted. However, the exercise price of an Incentive Stock
Option granted to a ten percent (10%) stockholder (as defined in the Incentive
Stock Option Plan), shall be at least 110% of the fair market value of Common
Stock on the date the option is granted; exercise prices of options granted
under the Non-Statutory Stock Option Plan may be less than fair market value.
The maximum aggregate number of shares which may be covered by options under the
Option Plans is 10% of the total outstanding share of Common Stock.
Incentive Stock Options covering 75,000 shares exercisable at $6.25 per share,
11,000 shares exercisable at $5.00 per share, 140,000 shares exercisable at
$3.30 per share, 624,000 shares exercisable at $3.00 per share, 97,500 shares
exercisable at $1.65 per share and 233,000 shares exercisable at $1.50 per share
and Non-Statutory Stock Options covering 45,000 exercisable at $5.00 per share,
55,000 shares exercisable at $3.00 per share, 20,000 shares exercisable at $1.70
per share and 30,000 shares exercisable at $1.50 per share have been granted and
not cancelled or exercised. As of October 31, 1997, Options covering an
additional 331,469 shares may be issued under the Option Plans.
11
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information as of December 1, 1997
concerning the ownership of the Company's Common Stock by (i) each person known
by the Company to be the beneficial owner of more than five percent of the
outstanding Common Stock, (ii) each of the directors of the Company, and (iii)
all directors and executive officers of the Company as a group:
Amount and Nature Percent
Name and Address of Beneficial Ownership (1) of Class
- ---------------- --------------------------- --------
John Collins (2) 4,787,545 (3) 22.1
T/S Financial Services Inc. 1,102,564 (4) 5.2
P.O. Box 335
Moorpark, CA 93020
Lawrence J. Brady (2) 143,000 (5) --
Shui-Yin Lo (2) 913,750 (6) 4.1
Alfred H. Kingon (2) -- --
William Odom (2) -- --
Terry Wachsner (2) -- --
Harold Rapp (2) 26,500 (7) --
Jim Nicastro 305,275 (8) 1.4
John M. Dab (2) 103,250 (9) --
All officers and 1,491,775 6.5
directors as a group
(8 persons) (5)(6)(7)(8)(9)
- --------------------
* Less than 1 percent.
(1) Except as reflected below, each of the persons included in the table has
sole voting and investment power over the shares respectively owned, subject to
the rights of spouses under applicable community property laws.
(2) The address of each of these persons is c/o American Technologies Group,
Inc., 1017 South Mountain Avenue., Monrovia, CA 91016.
(3) Includes 190,000 shares issuable upon exercise of Non-Statutory Stock
Options and 312,500 shares issuable under other options. Also included are
1,102,564 shares of Common Stock held of record by T/S Financial Services
Inc. for which Mr. Collins holds a proxy but not financial interest.
(4) These shares are subject to a proxy in favor of Mr. Collins.
(5) Includes 125,000 shares issuable upon exercise of an option.
(6) Includes 151,250 shares issuable upon exercise of Incentive Stock Options
and 782,500 shares issuable upon exercise of other options.
(7) Includes 25,000 shares issuable upon exercise of an option.
(8) Includes 3,900 shares held by Mr. Nicastro's wife and 126,875 shares
issuable upon exercise of Incentive Stock Options and 162,500 shares issuable
upon exercise of other options.
(9) Includes 4,500 shares of Common Stock held of record by Mr. Dab's
children under the Uniform Gift to Minors Act and 88,750 shares issuable upon
exercise of options granted under the Company's Stock Option Plans.
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<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The licensor of the BASER technology which the Company has sublicensed from NWEC
is Apricot which is 50% owned by Dr. Shui-Yin Lo, a director of the Company.
On July 22, 1994, the Company entered into a Technology Acquisition Agreement
with Shui-Yin Lo, the Company's Director of Research and Development and a
member of the Board of Directors. For $150,000 payable at the rate of a
minimum of $1,000 per month, of which $92,000 was paid as of October 30, 1996,
the Company acquired an option to acquire a 50% interest in Apricot or 100% of
the technology underlying BASERs as invented by Dr. Lo, if he reacquires such
rights. The exercise price for the option is 10,000 shares of Common Stock and
a royalty of 5% of ATG's net profit, if any, from the exploitation of BASERs
through July 21, 1999. Additionally, if Dr. Lo has not received 1,700,000
shares of Series A Stock in connection with the Company's purchase of the
Invention, the exercise price will include such shares. Under the Technology
Acquisition Agreement the Company acquired from Shui-Yin Lo exclusive right,
title and interest to the Invention for an Option to acquire 450,000 shares of
Common Stock at $3.00 per share, and, at such time as ATG receives an offer to
purchase the Invention as developed by ATG for commercial utilization or ATG
commences commercial utilization of any application of the Invention developed
by ATG, ATG agreed to (i) issue to Lo 1,700,000 shares of Series A Stock and
(ii) pay to Lo a royalty at the rate of 7.5% of ATG's net profit from the
exploitation of the Invention. If Dr. Lo receives the 1,700,000 shares of
Series A Stock as part of the exercise price for the BASER rights, then Dr. Lo
will not receive such shares if the Invention is commercialized in accordance
with the foregoing criteria.
Certain officers of the Company are employed pursuant to written employment
agreements the principal terms of which are described under "Item 10 Executive
Compensation."
In connection with the resignation of John Collins from his positions with the
Company, the Company and Mr. Collins entered into a Consulting Agreement with a
term expiring July 31, 1998 at a rate of $22,200.
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<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AMERICAN TECHNOLOGIES GROUP, INC.
By:/s/ Lawrence J. Brady
---------------------
Lawrence J. Brady
Chairman of the Board and
Chief Executive Officer
Date: January 22, 1998
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
NAME POSITION(S) DATE
---- ----------- ----
/s/ Lawrence J. Brady Chairman of the Board and January 22, 1998
- --------------------- Chief Executive Officer
Lawrence J. Brady
/s/ Harold Rapp Chief Financial Officer January 22, 1998
- ---------------
Harold Rapp
/s/ Shui-Yin Lo Director and January 22, 1998
- --------------- Director of Research
Shui-Yin Lo
/s/ Alfred H. Kingon Director January 22, 1998
- --------------------
Alfred H. Kingon
/s/ William Odom Director January 22, 1998
- ----------------
William Odom
/s/ Terry Wachsner Director January 22, 1998
- ------------------
Terry Wachsner
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